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MSD Exhibit No. MSD 3C
2023 Stormwater Rate Change Proceeding
RICHARD L. UNVERFERTH
Direct Testimony
Metropolitan St. Louis Sewer District
March 24, 2023
Table of Contents
Page
Witness Background and Experience ........................................................................................... 1
Stormwater Capital Improvement and Replacement Program ..................................................... 2
Stormwater Capital Improvement Program Funding .................................................................... 3
Stormwater Capital Proposal Impacts ........................................................................................... 8
Conclusion .................................................................................................................................... 9
Direct Testimony of Richard L. Unverferth, MSD March 24, 2023
2023 Stormwater Rate Proceeding 1 MSD Exhibit No. MSD 3C
Witness Background & Experience 1
Q1. Please state your name, business address, telephone number, and email address. 2
A. Richard L. Unverferth, 2350 Market, St. Louis, Missouri 63103-2555, 314-768-6204, 3
rlunve@stlmsd.com 4
Q2. What is your occupation? 5
A. I am the Director of Engineering for The Metropolitan St. Louis Sewer District (District or 6
MSD). 7
Q3. How long have you been associated with the District? 8
A. I have been associated with the District for 36 years. 9
Q4. What is your professional experience? 10
A. I have been with the District since January 1987. I held numerous staff-level engineering 11
positions early in my career, I was promoted to Engineering Manager in September 1993, 12
was transferred to the Operations/Maintenance Department from 1995 through 2001 as an 13
Associate Director responsible for the Operations Technical Division, returned to the 14
Engineering Department in 2001 as a Program Manager in the Planning Division, and 15
promoted to Assistant Director of Engineering/Planning in 2006 overseeing the long range 16
planning of the District’s Capital Improvement and Replacement Program (CIRP) 17
currently being implemented. I was promoted to my present position of Director of 18
Engineering on May 18, 2013. Prior to joining the District, I held staff-level engineering 19
positions with the City of St. Louis and the City of St. Charles. 20
Q5. What is your educational Background? 21
A. I hold a Bachelor of Science degree in Civil Engineering from the University of Missouri 22
– Rolla (Missouri University of Science and Technology). 23
Direct Testimony of Richard L. Unverferth, MSD March 24, 2023
2023 Stormwater Rate Proceeding 2 MSD Exhibit No. MSD 3C
Q6. Are you a registered Professional Engineer? 1
A. Yes, I am a registered Professional Engineer in the state of Missouri. 2
Stormwater Capital Improvement and Replacement Program (CIRP) 3
Q7. What is the purpose of MSD’s stormwater CIRP? 4
A. The stormwater CIRP (see appendix 8.12.1 of the Rate Change Proposal) provides a listing, 5
schedule, and cost of needed additions and improvements to the stormwater sewer and 6
drainage system to address issues of flooding and erosion. 7
Q8. Why is the CIRP needed? 8
A. The CIRP is needed to provide the project identification, planned fiscal year, and 9
anticipated annual costs associated with system improvements. This will then provide the 10
basis for required annual revenue to plan, design, and construct these improvements. 11
Q9. What type of projects make up the Stormwater CIRP? 12
A. The stormwater CIRP is primarily made up of projects identified from historical records 13
and engineering studies to address customer complaints about flooding and erosion. 14
Identified projects are segmented into three main categories: Local Flooding (small scale 15
flooding caused by overland flow or smaller streams); Regional Flooding (large scale 16
flooding in locations of major creeks and rivers); and Erosion (loosening and washing away 17
of soil due to the actions of water, usually adjacent to creeks and rivers). More specifically, 18
types of stormwater flooding problems listed in order of severity include: structure 19
flooding; roadway flooding; and yard flooding. Types of erosion problems listed in order 20
of severity include: stream erosion threatening a structure; stream erosion threatening a 21
road; and yard erosion. The CIRP includes the proposed funding for planning, design, 22
construction, easement acquisition, buyouts, and general service agreements for support 23
Direct Testimony of Richard L. Unverferth, MSD March 24, 2023
2023 Stormwater Rate Proceeding 3 MSD Exhibit No. MSD 3C
services such as survey, system investigation, and geotechnical services necessary to 1
accomplish this work. 2
Q10. What is the estimated size and cost of the stormwater CIRP using current revenue 3
sources? 4
A. The CIRP funded through current revenue sources includes limited construction of capital 5
projects when funding is available for those purposes, such as in OMCI taxing district areas 6
or through leveraging the limited Districtwide O & M tax to take advantage of grant 7
programs (in particular during this period the recently announced ARPA grant program 8
administered by the Missouri Department of Natural Resources, which we anticipate will 9
result in a one-time $22 million benefit to the District). 10
The stormwater CIRP includes funding of approximately $8.5 million annually for repairs 11
and rehabilitation of the existing stormwater system over this period, funded with the 12
District’s existing O & M tax. 13
The stormwater CIRP from existing revenue sources also includes $5.5 million in funding 14
to provide stormwater grants to third parties to promote flooding and erosion control, and 15
green infrastructure, funded via OMCI taxing districts and the District’s stormwater 16
regulatory fund. 17
The balance of the planned stormwater program funded with existing revenue sources 18
includes $49 million dollars for stormwater capital projects for fiscal years 2025 through 19
2028, which includes construction of 35 projects to address flooding and erosion issues. 20
As mentioned previously, it is expected that $22 million of this investment will be 21
reimbursed to the District on a one-time basis through the ARPA grant program from the 22
State of Missouri. 23
Direct Testimony of Richard L. Unverferth, MSD March 24, 2023
2023 Stormwater Rate Proceeding 4 MSD Exhibit No. MSD 3C
Q11. What is the estimated size and cost of the stormwater CIRP reflected in the 1
Stormwater Capital Proposal utilizing new stormwater revenue? 2
A. If the Stormwater Capital Proposal is approved by the voters, the District anticipates 3
collecting approximately $34 million each year to be used for stormwater capital projects. 4
The District has initially identified $69.2 million dollars for this portion of the stormwater 5
CIRP for fiscal years 2025 through 2028, which includes funding for grant programs as 6
well as planning, design, easement acquisition, and construction tasks necessary to begin 7
to implement a Districtwide stormwater capital program. 8
During this period the new Stormwater Capital Proposal includes $40.8 million in funding 9
for stormwater grants to third parties to promote regional and local flooding and erosion 10
control solutions. See Appendix 8.18 for additional details. 11
The Stormwater Capital Proposal would also fund the design of 76 projects to address 12
flooding and erosion issues during this period, and construction of 35 projects during this 13
period, for approximately $28.4 million. The District assesses the overall identified 14
stormwater project listing on an ongoing basis and anticipates that additional high priority 15
projects would be identified and funded during this period as new issues arise. Overall, 16
the identified stormwater projects listing consists of 561 projects at a conceptual cost of 17
approximately $696 million. 18
Q12. How were the costs for Stormwater CIRP project types determined that are presented 19
in the Stormwater Capital Proposal? 20
A. For storm sewer work, cost estimates are based on historical District bid prices using 21
conceptual design information. For channel restoration and green infrastructure 22
Direct Testimony of Richard L. Unverferth, MSD March 24, 2023
2023 Stormwater Rate Proceeding 5 MSD Exhibit No. MSD 3C
improvements, estimates are based on the technical expertise of consulting engineers and 1
past data on similar District projects. For property buyouts, estimates are based on St. 2
Louis City or St. Louis County assessed values plus costs for relocation and demolitions. 3
Stormwater Capital Improvement and Replacement Program Funding 4
Q13. What is the current funding source for stormwater capital projects? 5
The current stormwater funding for capital improvements is limited to funding received 6
from seven (7) OMCI taxing sub-districts that are currently active and collecting revenues. 7
These taxing districts are watershed based, and the funds collected in them must be spent 8
within their respective watersheds. In addition, some unexpended funds from the District’s 9
Stormwater O&M tax can be used for capital projects. The District also has a stormwater 10
regulatory fund, but that revenue is not traditionally used for capital projects. 11
A. Q14. What is the proposed method of funding the CIRP reflected in the Stormwater 12
Capital Proposal? 13
A. The District is proposing a new source of revenue for stormwater capital improvements 14
using property taxes for residential customers and an impervious area-based charge for 15
non-residential customers. 16
Q15. How will MSD expend the revenues collected for stormwater capital improvements? 17
A. MSD’s goal will be to expend the revenues in four buckets: (1) 50% of the program will 18
be allocated to Districtwide projects prioritized by our current benefit/cost (B/C) ratio; (2) 19
30% will be allocated as municipal grants; (3) 10% will be allocated to identified 20
Environmental Justice (EJ) areas of the District using B/C ratio for prioritization; and (4) 21
10% will be allocated towards other important stormwater capital issues in consultation 22
with a Districtwide steering committee such as one centered around the Municipal League 23
Direct Testimony of Richard L. Unverferth, MSD March 24, 2023
2023 Stormwater Rate Proceeding 6 MSD Exhibit No. MSD 3C
of Metro St. Louis. Unused funds from the municipal grants program will be made 1
available for projects in the Districtwide program (50%) or the EJ program (10%) as 2
appropriate. 3
Q16. How are Environmental Justice (EJ) projects identified in the CIRP? 4
A. There is no formal Federal or State EJ program definition available, although MSD will 5
use a formal program definition if one becomes available. EPA’s current definition of 6
Environmental Justice is “the fair treatment and meaningful involvement of all people 7
regardless of race, color, national origin, or income, with respect to the development, 8
implementation, and enforcement of environmental laws, regulations, and policies. This 9
goal will be enjoyed when everyone enjoys the same degree of protection from 10
environmental and health hazards, and equal access to the decision-making process to have 11
a healthy environment in which to live, learn, and work.” Based upon recent industry 12
discussions and the current administration’s approach to EJ, MSD’s approach to EJ is to 13
be fair and provide equal opportunities to all our customers. 14
The District proposes to allocate 10% of the new stormwater capital revenue to focus 15
capital improvement work in EJ areas. MSD has identified EJ areas within the District by 16
using “qualified census tracts.” A qualified census tract (QCT) is defined under the Internal 17
Revenue Code and is designated by the Secretary of Housing and Urban Development 18
(HUD), as any census tract, based on the most recent year for which census data are 19
available in which 50 percent or more of the households have an income below 60 percent 20
of the area median gross income (AMGI) for the year, or which has a poverty rate of at 21
least 25 percent. This methodology was utilized for submitting EJ criteria for State of 22
Missouri ARPA grant funding and was found to be acceptable. The geographic area for 23
Direct Testimony of Richard L. Unverferth, MSD March 24, 2023
2023 Stormwater Rate Proceeding 7 MSD Exhibit No. MSD 3C
these projects has been defined, and the capital improvement program costs have been 1
identified for projects within these areas using the District’s normal benefit/cost 2
prioritization process. More details can be found in appendix 8.16 and 8.17 and of the 3
Stormwater Capital Proposal. 4
Q17. How will the Municipal Grant Program be administered? 5
A. The District proposes to offer approximately 30% of the new stormwater capital revenue 6
to municipalities in the form of grants. These grants would facilitate local stormwater 7
priorities being addressed at the local level. This grant program would be modeled on the 8
successful OMCI taxing district grant program for municipalities that has been 9
implemented by the District over the last few years. 10
This grant revenue would be offered to municipalities based on population. Seven 11
population ranges or groupings are envisioned, with each municipality within a given range 12
receiving the same grant amount. Grants would range from $30,000 to $1,550,000. More 13
details can be found in appendix 8.18 of the Stormwater Capital Proposal. 14
Q18. What is the plan for the OMCI taxes with this Stormwater Capital Proposal? 15
A. As was the case with the 2018 Stormwater Rate Proposal, if the voters approve the new 16
stormwater capital program, the OMCI taxes will be set to zero and the remaining fund 17
balances will be used to plan, design, and construct needed capital improvement projects 18
within each OMCI district and to administer municipal grants until funds are depleted. 19
Q19. Has the District proposed a credit or incentive program related to the proposed 20
Stormwater Capital program? 21
A. The District is not proposing a credit or incentive program with the new stormwater 22
program. With the proposed rate structure being a combined property tax (residential) and 23
Direct Testimony of Richard L. Unverferth, MSD March 24, 2023
2023 Stormwater Rate Proceeding 8 MSD Exhibit No. MSD 3C
impervious area-based charge (non-residential), and the inability to provide for partial or 1
full tax credits, the District would be unable to equitably allow for stormwater credits. 2
However, there are ways for customers to be incentivized to implement green practices. 3
For residential customers, the District has available a Small Grant Rainscaping Program 4
that allows for the reimbursement of up to $3000 for constructed Green Infrastructure (GI) 5
improvements or Best Management Practices (BMP). Detailed information on the Small 6
Grant Program is available on the MSD Project Clear website. For non-residential 7
customers, constructed GI or BMPs that are designed and constructed to be pervious will 8
be 100% excluded from the billable impervious area. Examples include green roofs and 9
pervious pavement. 10
Q20. Has a process been developed for non-residential customers to contest the amount of 11
impervious surface area used to determine their charge? 12
A. Yes. When the new impervious area-based charge is put into place, MSD will be prepared 13
to handle customer inquiries to ensure customers are correctly billed. MSD will designate 14
Engineering Department staff to assess customer claims and make adjustments to 15
impervious areas to adjust the billable units used by the Finance Department. GIS tools 16
will enable this process to be handled efficiently. 17
Q21. Will customers in the Levee Districts be charged the District’s proposed Stormwater 18
Capital charges? 19
A. No, with the exception of the Missouri Bottoms-Hazelwood levee district. The remaining 20
Levee Districts possess, pursuant to statutory authority, the responsibility to provide 21
stormwater services within their respective service areas. The Levee Districts will execute 22
their powers and duties by assuming all O&M activities and complete management of the 23
Direct Testimony of Richard L. Unverferth, MSD March 24, 2023
2023 Stormwater Rate Proceeding 9 MSD Exhibit No. MSD 3C
stormwater system, including capital improvements to address flooding and erosion. Thus, 1
MSD and the Levee Districts will continue agreements that leave such issues to the Levee 2
Districts. MSD will continue to provide only certain regulatory services within the Levee 3
Districts, which services are funded by the regulatory tax currently assessed throughout the 4
MSD service area, including the Levee Districts. Accordingly, MSD will not assess the 5
new stormwater capital charges within the Levee Districts (with the exception of the 6
Missouri Bottoms-Hazelwood levee district). (See Exhibit MSD 62 for Levee District 7
Agreements) 8
Q22. What resources will the District need to successfully manage, construct, and complete 9
the expanded Stormwater CIRP presented in this Stormwater Capital Proposal? 10
A. The Engineering Department will need to procure additional resources to plan, design, 11
manage, and inspect the construction improvements proposed in the proposed Stormwater 12
CIRP, and implement the municipality grant program. The Department intends to perform 13
all tasks with both internal staffing and external consulting resources. The department 14
estimates approximately 28 internal FTEs to deliver the program, consisting of existing 15
staff and new hires. 16
Q23. What costs for the Engineering Department have been added to the Stormwater 17
Capital Proposal associated with this increase in stormwater CIRP? 18
A. The costs for Engineering can be found in Table 5-5 on Page 5-7 of the rate proposal. The 19
operating costs are comprised of engineering staff to manage the proposed stormwater 20
CIRP and costs to generate and maintain the District’s impervious area data utilized to 21
generate the billing data. 22
Q24. Are there any other contributions or grants the District could possibly obtain for 23
Direct Testimony of Richard L. Unverferth, MSD March 24, 2023
2023 Stormwater Rate Proceeding 10 MSD Exhibit No. MSD
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stormwater capital projects? 1
A. In the past the District has been able to take advantage of the Missouri State Stormwater 2
Grant and Loan Program. However, that program has been funded by the State of Missouri 3
only intermittently for many years. More recently, the District did have the ability to take 4
advantage of American Rescue Plan Act (ARPA) grant funding available through the 5
Missouri Department of Natural Resources. We were able to procure approximately $22.3 6
million in grant funding. With MSD providing a local match of $6.8 million, we will be 7
able to accomplish 8 projects for a total cost of $29.1 million over the next three and a half 8
years. Local match was provided with uncommitted OMCI balances and unencumbered 9
O&M funding. The District performs regular state and federal lobbying activities, one of 10
the main goals of which is to seek financial assistance for the District. 11
STORMWATER CAPITAL PROPOSAL IMPACTS 12
Q25. Will the Stormwater Capital Proposal have any impact on the District’s current or 13
future obligations for Stormwater Regulatory Services? 14
A. No. There is currently a Districtwide 2 cent ad valorem tax per $100 Assessed Value levied 15
by the District that provides adequate funding to meet our current regulatory obligations. 16
This tax will remain in place to fund these services. 17
Q26. Will the Stormwater Capital Proposal have any impact on the District’s current or 18
future obligations for Stormwater Operations and Maintenance? 19
A. No. There is currently a Districtwide 10 cent ad valorem tax per $100 Assessed Value 20
levied by the District that provides adequate funding to meet our current Operations and 21
Maintenance activities. This tax will remain in place to fund these services. 22
Q27. Will the Stormwater Capital Proposal and Stormwater CIRP have any impact on the 23
Direct Testimony of Richard L. Unverferth, MSD March 24, 2023
2023 Stormwater Rate Proceeding 11 MSD Exhibit No. MSD
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delivery of the District’s Wastewater CIRP or compliance with the District’s Consent 1
Decree? 2
A. No. The District will continue the delivery of the Wastewater CIRP as planned within the 3
wastewater rate structure. The District is currently in compliance with all portions of the 4
Consent Decree and continues to deliver the Wastewater CIRP on-time and within budget. 5
CONCLUSION 6
Q28. Have Stormwater capital improvements been delayed due to lack of funding? 7
A. Yes, especially in the areas of the District where previous funding has not been available. 8
Q29. Does this conclude your prepared direct testimony in this matter? 9
A. Yes, it does. 10